Pensions 'key priority' for EC
Mindful of the disappointing level of pan-European debate vis-à-vis pension reform in recent years, the European Commission is gearing up to issue a new set of guidelines for how national policymakers report back to the EU on the state of their pension reform.
Also in November, the EU’s Social Protection Committee (SPC) has given some idea of its latest research into the contribution that private retirement provision can make to sustainable pension systems, due out early next year. And the new commission says that pensions remain one of its priority areas, although it has been noticeably silent about how it plans to move the agenda forwards.
Natonal Strategy report: Three years ago, when member states last reported back on pension reform, there was a general feeling of apathy. Many regarded the reports as too descriptive and not specific enough - they didn’t adequately identify national problems or propose remedies. And, with a maximum length of just 25 pages, they were also considered too short.
This time round, the commission wants the reports to be used as instruments to take national policy debate forwards, notably by analysing one’s own country’s situation with reference to that in other member states.
The commission says that it will provide the latest data from EU sources, to facilitate country-by-country comparisons. In return, it expects member states to include in the reports more precise indicators about what they are doing to meet the goals of pension reform.
But the commission does not want the reports to be too rigid. On the contrary, the Commission plans to give member states greater scope to develop those topics that are most relevant in a national context. There will also be no fixed limit as to the length of the reports. The commission envisages member states issuing a follow-up to the report that includes proposals for national pension reform, with a clear timetable for action.
Geert Decock, policy officer at AGE, a pressure group for the elderly, welcomes the proposed new guidelines. Decock believes that being able to compare the circumstances of older people in different member states is essential to policy co-ordination between countries.
The commission hopes that the guidelines will be endorsed by the SPC at their meeting held as IPE went to press and will then be formally rubber-stamped by EU social affairs ministers. Member states have until 15 July next year to submit their national reports.
Private pensions: The SPC has been look at the role that private pension schemes can play in sustainable pension reform. The final results of the SPC research are not due out until next year, but at a conference organised on 4 November the committee gave some indication of its preliminary findings.
While private pension schemes are on the rise in Europe, participation rates continue to remain low, with less than half of workers in most member states belonging to such schemes. This means that public pay-as-you-go pension schemes are likely to remain the principal source of income for pensioners for sometime to come, says a summary note of the conference.
The note adds that, although private pension schemes can help ease the burden on public retirement provision, increased reliance on them makes public policy intervention more complex and harder to predict the effects of.
Another concern that needs to be looked at, according to the conference conclusions, is how the shift towards more savings and defined contributions schemes will increase the uncertainty about pension entitlements, possibly resulting in more people being inadequately covered by pension provision.
In carrying out its research, the SPC found that the data provided by member states was patchy and contained major gaps. There is a need to develop better statistical tools for an effective monitoring of private pension provision, says the SPC, adding that the pensions forum, an existing body of all major stakeholders in the field of supplementary provision, could help in establishing a better information framework.
The new Commission: This finally took office on 22 November after a three-week delay, has been markedly silent about the pension issue, although commission spokespeople insist that it remains a key priority for the executive.
Vladimir Spidla, the commissioner responsible for social affairs, mentioned his position on pensions in his questionnaire submitted to the European Parliament prior to taking office. He highlighted the importance of policy co-ordination between member states and encouraging people in Europe to work longer.
Internal market commissioner Charlie McCreevy was similarly taciturn, although he reaffirmed the EU’s commitment to break down cross-border barriers allowing the free flow of capital and services, including pensions, between countries.
But some remain worried about the effect that the decision to separate the taxation department from the internal market may have on pension reform. Chris Verhaegen, secretary general of the European Federation for Retirement Provision (EFRP), says that the commission has so far been effective in clamping down on the discriminatory tax treatment of foreign pension providers in member states, and would like to see this continue.